Covid’s response caused the British government to raise debts in April
Due to the increase in public spending and limited tax revenue due to Covid-19 restrictions, the amount of borrowing by the British government in April exceeded economists’ expectations.
Data released by the National Bureau of Statistics on Tuesday showed that net public sector borrowing, excluding public sector banks, was estimated at 31.7 billion pounds last month.
This figure is the first figure for the 2021/2022 fiscal year, the second highest record of borrowing in April since the monthly record began in 1993, but it was 15.6 billion pounds less than the same month last year. The figure is higher than the 30.9 billion pounds expected by economists surveyed by Reuters, but lower than the 39 billion pounds estimated by the Office of Budget Responsibility.
For the fiscal year ending in March 2021, public borrowing was reduced by 2.8 billion pounds, but it was still the highest level since World War II, which exposed the cost of government support to the economy during the pandemic.
ONS shows that central government agencies spent an estimated £96 billion on daily activities in April. This includes spending on vacation plans, which can still protect millions of jobs.
At the same time, the central government’s tax revenue is estimated at 58 billion pounds, which is an increase from April last year, but it is low by historical standards.
KPMG senior economist Michal Stelmach said that public finances may improve faster than after the financial crisis, when it took five years for the financial deficit to fall from its peak to half.
He said: “In this crisis, once the support program ends, we may have foreseen this situation next year, although it may take longer to fully return to Covid’s previous financial situation.”